Dean Foods sales fall below expectations

ChelseyDulaney

Dean Foods Co.'s reported a worse-than-expected 16% slide in sales for its second quarter, though lower raw-milk costs and pricing actions helped the biggest U.S. milk processor deliver a profit.

Dean Foods' shares fell as much as 18% in morning trading to their lowest point since November. Recently, shares were down 11% at $15.76 a share.

The results Monday come after Dean Foods announced late Friday that its chairman had resigned. The company gave no explanation for the departure of Tom C. Davis, who has been nonexecutive chairman since 2013.

Dallas-based Dean has suffered from a decades-long decline in per capita U.S. milk consumption, which was compounded starting in 2013 by a nearly two-year spike in the price of raw milk that pinched profits. As a result, the company has been closing factories and slashing other costs.

While milk consumption has continued to slide, raw milk prices have fallen sharply since last fall, bolstering Dean Foods' prospects.

In the latest quarter, raw milk costs tumbled 33% from a year earlier, while total volume fell 3% to 653 million gallons. The company had expected volume to decline in the low-single digits.

In all, Dean reported a profit of $26.5 million, or 28 cents a share, compared with a loss of $645,000, or a penny a share, during the same period a year earlier. Input costs fell 24% from the prior year.

For the current quarter, Dean Foods forecast per-share earnings of 17 cents to 27 cents, while analysts were calling for 21 cents a share. The company forecast a low-single-digit decline in volume and a slight increase in raw-milk costs.

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